Nifty Metal has emerged as one of the best-performing sectoral indices in 2025, closely trailing the PSU Bank index, with over 24% returns so far this year. The stupendous rally in the metal pack comes on the heels of up to 55% surge in its constituents.
According to data from Trendlyne, barring Adani Enterprises, all metal stocks have risen in a year, with Hindustan Copper emerging as the top gainer, with a 55.6% rise. It is followed by NALCO, Hindalco, Hindustan Zinc, and Vedanta, whose shares have risen 30% or more in this period.
The momentum remains strong in the metals pack, with the index rising 2% in a week and 7% in a month.
What drove rally in metal stocks?
This rally in metal stocks stems from various factors and not any standalone trigger. The first and foremost is the expectations of the rate cuts by the Federal Reserve, which supports dollar-denominated commodities.
As the labour market conditions ease, the Fed would likely lower rates further, which bodes well for the metals market.
Secondly, China has been a key producer and consumer of most base metals. China’s incremental policy support for infrastructure and renewable energy is also improving demand visibility, opined Nitant Darekar, Research Analyst at Bonanza Portfolio.
Moreover, structural supply constraints across base metals — due to mining disruptions, higher energy costs, and underinvestment — have tightened inventories just as EV and renewable demand remains strong, Darekar added.
A softer US dollar has provided additional tailwinds. As markets factor in a gradual easing cycle in the US, the dollar index has softened from recent highs, lending support to dollar-denominated commodities.
But the question remains, how long will this rally in metal stocks last?
Metal stock rally may sputter in 3-6 months, warn analysts
Amid such a sharp spike in most metal stocks, G Chokkalingam, Founder of Equionomics Research, said that now would be a good time to start booking profits as most assets look inflated, and metals have also joined that rally.
“To be fair, there are fundamental reasons. Demand from renewable energy sources has supported metals like aluminium. However, to some extent, there is a bit of a bubble in metals, which is why I expect some correction.”
His concerns around the metal rally stem from a possible slowdown in the world’s two largest economies as the impact of tariff-related measures begins to unfold.
The US has increased tariffs across major products and economies, which will raise the landed cost of imports. This will impact consumer spending in the US and, eventually, GDP growth, he said. Looking at China, the second-largest economy, forecasts suggest lower GDP growth over the next couple of years.
“Industrial metals are highly correlated with global economic growth, especially in China, which is both the largest producer and consumer of metals. Therefore, the medium- to long-term outlook is not very encouraging,” opined Chokkalingam.
Against this backdrop, he believes the current surge in metal stocks offers an opportunity to gradually and safely exit.
Meanwhile, Ajit Mishra of Religare Broking said that an outright correction in the metal stocks seems unlikely, but some correction could unfold in 3-6 months.
“Metals are cyclical in nature, and corrections usually come after prolonged consolidation. As of now, indications suggest that the outperformance we are seeing in metals could continue for at least the next three to six months, after which some consolidation may unfold,” he said.
Fundamentally, he sees several factors continuing to remain favourable, like the demand-supply mismatch, strong China GDP data and softer dollar.
Nifty Metal: Technical outlook
Virat Jagad, Sr. Technical Research Analyst at Bonanza Portfolio, said that the Nifty Metal Index is trading near 10,730, attempting a breakout after reclaiming key short-term averages.
“The recent move above the falling trendline and sustained price action above the 20 and 50 EMA signal improving momentum. The broader structure remains constructive, with higher lows intact above the rising trendline and the 100 EMA acting as strong medium-term support near 10,000–10,050.”
The RSI around 66 indicates strengthening bullish momentum without entering overbought territory, he said. A decisive close above 10,750–10,800 could open further upside toward 11,000, while on the downside, dips toward 10,400–10,450 may attract buying interest, keeping the trend positive overall.
Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
